Correlation Between Camus Engineering and Korea Air

Can any of the company-specific risk be diversified away by investing in both Camus Engineering and Korea Air at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Camus Engineering and Korea Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Camus Engineering Construction and Korea Air Svc, you can compare the effects of market volatilities on Camus Engineering and Korea Air and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Camus Engineering with a short position of Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camus Engineering and Korea Air.

Diversification Opportunities for Camus Engineering and Korea Air

-0.06

Correlation Coefficient

Camus Engineering  Korea Air

Good diversification

The 3 months correlation between Camus and Korea is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Camus Engineering Construction and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc and Camus Engineering is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Camus Engineering Construction are associated (or correlated) with Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Camus Engineering i.e., Camus Engineering and Korea Air go up and down completely randomly.

Pair Corralation between Camus Engineering and Korea Air

Assuming the 90 days trading horizon Camus Engineering Construction is expected to under-perform the Korea Air. But the stock apears to be less risky and, when comparing its historical volatility, Camus Engineering Construction is 1.32 times less risky than Korea Air. The stock trades about -0.03 of its potential returns per unit of risk. The Korea Air Svc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,297,966  in Korea Air Svc on October 10, 2024 and sell it today you would earn a total of  1,142,034  from holding Korea Air Svc or generate 26.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Camus Engineering Construction  vs.  Korea Air Svc

Camus Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camus Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Camus Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Korea Air Svc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Air Svc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Korea Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Camus Engineering and Korea Air

The main advantage of trading using opposite Camus Engineering and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Camus Engineering position performs unexpectedly, Korea Air can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Korea Air will offset losses from the drop in Korea Air's long position.

The idea behind Camus Engineering Construction and Korea Air Svc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..